Eurozone in deflation. US on course for mid–2015 rate rise

<p>The euro is still under pressure from yesterday’s inflation data shows that the eurozone has fallen into deflation. The ECB now looks set to act […]</p>

The euro is still under pressure from yesterday’s inflation data shows that the eurozone has fallen into deflation. The ECB now looks set to act on QE in the 22nd January meeting.

Today the EU retail sales will be released expecting a slight drop to 0.3% from 0.4%. German retail sales were released yesterday and were better than expected but still lower than the last read.

EUR/USD currently trading just above 1.1800 finding a lot of support but looking very weak as we start the day.

The US dollar still continues its dominance against most majors, with the help of good data yesterday, a smaller trade deficit than expected, and the ADP data coming out better.

Last night’s FOMC minutes didn’t have much effect on the release as the wording was pretty much the same: the added rate rise is unlikely before April, and there was a mention that the oil decline will likely be positive for the economy.

Today the unemployment claims will be released and are expected at 291k, down from 298k.

In the UK, the bank rate will be announced. And is expected to be unchanged at 0.5%, with asset purchases at 375b.
GBP/USD is currently trading below 1.5100 and struggling to deal with the strength of the USD and the weakness in the euro.

The Aussie and the yen were the main movers overnight, with AUD building approvals surprising the market pushing the AUD/USD back above 0.8100. Yen weakened against the USD as it followed the strength in the Nikkei.

There’s overnight data from Australia and China to watch, with Aussie retail sales expected at 0.3% and Chain CPI the main one that will move the markets today: expected up at 1.5% from previous 1.4%.



Supports  1.1790 1.1750 1.1700  | Resistance  1.1890 1.1940 1.1980




Supports  118.80 118.25 117.80 Resistance  119.70 120.15 120.70




Supports 1.5055 1.5000 1.4955  Resistance 1.5155 1.5200 1.5260



Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.